I am a Tax Partner in WithumSmith+Brown’s National Tax Service Group and the founding father of the firm's Aspen, Colorado office. I am a CPA licensed in Colorado and New Jersey, and hold a Masters in Taxation from the University of Denver. My specialty is corporate and partnership taxation, with an emphasis on complex mergers and acquisitions structuring. In the past year, I co-authored CCH's "CCH Expert Treatise Library: Corporations Filing Consolidated Returns," was awarded the Tax Adviser's "Best Article Award" for a piece titled "S Corporation Shareholder Compensation: How Much is Enough?" and was named to the CPA Practice Advisor's "40 Under 40."

In my free time, I enjoy driving around in a van with my dog Maci, solving mysteries. I have been known to finish the New York Times Sunday crossword puzzle in less than 7 minutes, only to go back and do it again using only synonyms. I invented wool, but am so modest I allow sheep to take the credit. Dabbling in the culinary arts, I have won every Chili Cook-Off I ever entered, and several I haven’t. Lastly, and perhaps most notably, I once sang the national anthem at a World Series baseball game, though I was not in the vicinity of the microphone at the time.

Golfer Phil Mickelson May Call It Quits Due To Climbing Tax Rates

JANUARY 20: Phil Mickelson hits his second shot on the tenth hole at the Nicklaus Private Course at the PGA West during the second round of the Humana Challenge. (Image credit: Getty Images via @daylife)

Word is, Phil Mickelson is mad as hell about rising tax rates, and he’s not going to take it anymore. What follows is a brief portion of an interview Mickelson gave earlier today after carding a final-round 66 at the Palmer Course at PGA West in La Quinta – which I assure you, is not associated with the La Quinta next door to your local Denny’s – in which the golfer hinted that he is considering drastic career changes because of a combined tax rate nearing “62, 63 percent:”

Q. When you’re asked about Stricker’s semi-retirement, with the political situation the last couple months, blah, blah, blah, what did you mean by that? Do you find it an unsettling time in a way?

PHIL MICKELSON: Well, it’s been an interesting offseason. And I’m going to have to make some drastic changes. I’m not going to jump the gun and do it right away, but I will be making some drastic changes.

PHIL MICKELSON: I’m not sure what exactly, you know, I’m going to do yet. I’ll probably talk about it more in depth next week. I’m not going to jump the gun, but there are going to be some. There are going to be some drastic changes for me because I happen to be in that zone that has been targeted both federally and by the state and, you know, it doesn’t work for me right now. So I’m going to have to make some changes.

To be honest, it’s hard to blame Mickelson – who has compiled a net worth approaching $180 million by repeatedly striking a tiny white ball until it falls into a hole — for putting all options on the table, which according to some, include the possibility of prematurely shutting down his career to avoid his rising tax burden. Let’s take a look at what Mickelson is up against in 2013:

For starters, courtesy of President Obama’s re-election and the subsequent fiscal cliff negotiations, Mickelson will experience an increase in his top tax rate on ordinary income from 35% to 39.6%, and an increase in his top rate on long-term capital gains and qualified dividends from 15% to 20%. Clearly, when faced with tax hikes of that magnitude, it stops making economic sense for Mickelson to continue to swing a metal stick up to 70 times a day in exchange for the $48 million he earns on an annual basis.

But it gets worse. Thanks to the expiration of the temporary 2% reduction in the payroll tax rate on the first $113,700 of self-employment income, Mickelson will have to fork over an extra $2,274 in tax during 2013, an additional burden that makes it hard to justify briskly walking as many as five miles per day, four days a week. In long pants, nonetheless.

And then there’s the impact of Obamacare. When you consider that from now on, Mickelson will be liable for an additional 0.9% tax on his self-employment income and 3.8% tax on his net investment income after each exceeds $250,000, what’s left over from the multi-million dollar endorsement deal requiring him to sport a Rolex watch while playing private courses in exotic locales hardly seems worth it.

If you think perhaps Mickelson is being a bit of a baby for threating to end a career that’s earned him a spot on this list of 10 wealthiest athletes on the planet because of some tax increases, understand that he’s getting hit on the state level, too. In November, California passed Proposition 30, which increases the top income tax rate on resident millionaires to 13.3%, a drain on Mickelson’s take-home pay that may force him to sell his 9,500 square foot mansion and flee his home state in search of more friendly pastures.

Should Mickelson follow through on his promises, he is fortunate that there is no shortage of countries across the globe that offers an opportunity for a man to earn exorbitant riches by playing a game. But I, for one, would encourage Mickelson to stay the course, continue to fight the good fight, and hire a savvy tax advisor. He shouldn’t have to look too far; after all, one of the sponsors that paid Phil an estimated $44 million in 2012 was KPMG.

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My last pay check was $9500 working 12 hours a week online. My sisters friend has been averaging 15k for months now and she works about 20 hours a week. I can’t believe how easy it was once I tried it out. The potential with this is endless. This is what I do, Big44.ℂOM

I’m a Mickelson fan, but I cracked up at this article. He does seem a little spoiled to be whining about this. He should see how crippling taxes can be for us regular people and how not fun a lot of “real” jobs are.

But I will stick up for Phil…nowhere in his interview did he “threaten to quit over taxes”. He avoided the questions abou leaving Cali, so maybe he’s actually thinking of that, but I don’t see any comment where he’s threatening to quit. How would quitting solve his problem of losing money anyway? It would be ironic to whine about how much of your income is going to taxes and then respond by cutting off that source of income. He should feel grateful to have enough money to be in this “predicament” but I won’t fault him if he wants to move out of state.

WinGolf, there was a link in the body of the text to a tweet from somone who was in attendance and believed his words indicated he could retire. Obviously, there’s no way you can imagine that he’d quit because of taxes, but I was just having some fun with the whole notion that someone would quit making $50 million a year because of rising taxes.

The thing is, Tony, that this story is #1 in “Trending Now” in Yahoo….a lot of people are reading it….some will not take the time to read these comments below. They will vilify Phil instead of realizing that, just like all of us, he has some angst about the govt & taxes.

The thing we have to remember is not this “weak moment” in the public eye, but all of the good charitable work that Phil & Amy do. It’s good to balance this story that way to remind people that from them it is not just the money or just the “things” they have, but it probably will impact their charitable work to some extent.

Even if it is merely a rant, I still cut him some slack because of all the good influence he has in charity & the golf world.

Phil’s tax rate is probably much higher than he thinks, once you account for the double-taxation on savings and investment. For example, suppose someone makes $100 in wages and can earn 10% return from investing it. He can either have $100 pre-tax now or 110 one year from now. Now, suppose his marginal tax rate is 20% but it is levied on wage income only, with no taxes on investment returns. Then, post-tax he can either have $80 now or $88 one year from now, in both cases 80% of the pre-tax amount for an effective tax rate of 20%. In reality, though, that $8 of post-tax investment return will be taxed again and, if it’s interest or dividends, after N years that $100 will be taxed not just twice but (N+1) times. So, the effective tax rate will be much higher than 20%. On top of that, at this point, Phil is earning money mainly for his kids and grandkids, so that same income will incur an estate tax (40%). When one adds up all the layers of taxes, Phil’s tax rate is probably 80-90%. Here is one example of how all the layers of taxes add up: http://www.nytimes.com/2010/10/10/business/economy/10view.html

Given that 80-90 percent of what Phil makes will likely go to the government rather than his kids, it may very well make sense for him to stay home and spend more time with his family rather than travel on tour every week. If he did that, the world would lose a great golfer. On the other hand, suppose Phil was a businessman with the same effective tax rates. If that businessman were to retire, his customers would no longer benefit from his product and services, and his employees would be out of a job. So, Phil is not just speaking up for himself, he is speaking up for all the business people out there, their customers, and their employees — that’s most of us.

I didn’t infer from his quotes that he was necessarily considering quitting golf, as much as he would be quitting California, which makes eminent sense.

That said, if the choice is between keeping 15 million per year (out of 50 million) going on the road away from family, or living off investment income (probably another 10 million or so) while remaining home (I believe he has a wife who is a cancer survivor), it wouldn’t be a hard choice at all for me.

Why does the number matter, Tony? I don’t care if it’s fifty thousand or fifty million paying over 50% in taxes is egregious, unnecessary, and I applaud Mr. Mickelson should he decide to take a stand against oppressive taxation.